Contents

Introduction..........................................................................................................................................1
Common Mistake................................................................................................................................2
Mutual Mistake....................................................................................................................................6
Unilateral Mistake...............................................................................................................................8
Unilateral mistake as to identity - 4 elements to prove identity is important...................................9
Mistake inter absentaes..................................................................................................................10
Mistake inter presents.....................................................................................................................11
Distinction between Identity and Attribute.....................................................................................12
Introduction
 Oxford Dictionary:
o A mistake is a misunderstanding or erroneous belief about a matter of
fact or a matter of law. A mistake renders a contr3act void ab initio
 The law of mistake refers to where both parties have entered a contract under
the same fundamental mistake, which will render the contract void
 2 categories - mistake of fact & mistake of law
 Void ab initio
o Meaning: Void from the very beginning
o contract is invalid from the beginning
o case: Associated Japanese Bank (International) Ltd v Credit du Nord
 Section 6 of the Sale of Goods Act 1979 requires that the goods
have perished, therefore, they will have needed to exist at some
point. Goods that have never existed at all will also amount to a
fundamental breach
 Mistake in CL and mistake in Equity
o CL – common law
o Equity:
 has a much wider scope than mistake in CL
 covers wider things
o case: Clarion Ltd v National Provident Institution [2000]
 Court held that they will not assist where the party makes a
mistake as to the commercial consequences or effect of a
contract rather than as to its subject matter or terms
 Categories of mistake:
o Common mistake
 single mistake shared by both parties
o Unilateral mistake
 where only one party is under a misunderstanding
o Mutual mistake
 both parties are mistaken on diff matters

Common Mistake
 it is a single mistake shared by both parties
 we think we are contracting about apples but in fact, we are contracting on
oranges
 A non-agreement mistake refers to where the parties have reached a valid
agreement, but would like to nullify this agreement due to a mistake as to the
terms or subject of the agreement. This is often referred to as a ‘common’
mistake, as a claim for non-agreement mistake requires that both parties
made the same mistake
 The two main requisites for non-agreement mistake are as follows:
o The mistaken matter must be one which is fundamental to the parties’
decision to enter into the agreement
 o The party wishing to rely on common mistake must have reasonable
grounds for their belief
 the mistake will render the contract void only if it robs it of all substance
 both parties make a fundamental mistake– common mistake is made when
the contract has full consensus ad idem (agreement on the same
thing/agreement of the minds)
 both parties are making a mistake on the same thing
 Subject matter ceased to exist/had never existed
o in most cases of common mistake, the subject matter ceases to exist
when it has been created
 the courts have pre-determined a number of categories which will be
presumed to be fundamental to the parties’ decision to enter the contract:
o res extincta
 Mistake as to the subject matter
 the existence of a subject matter where the SM of the contract
known to the parties ceases to exist
 case: Strickland v Turner
 confirmed that a mistake as to the subject matter would
amount to one which is fundamental to the decision to
enter the agreement. In this case, there was a contract
for the annuity of a person’s life, but there was a (rather
large!) mistake, in that the person was already dead
 case: Galloway v Galloway
 a husband was married to his second wife. they wanted
to separate. the husband made a promise to give
allowance to wife. they later discovered that the first wife
did NOT die yet... DUM DUM DUM... as they had
originally thought so. he ceased payment to wife #2 and
wife #2 sued for arrears (the back payment that he didnt
pay). her action failed bec the separation agreement
entered into was under a common mistake that the
parties were actually married due to wife #1 still being
alive, wife #2's marriage was void and the separation
agreement was also void. court held the action of the wife
2 suing for the separation agreement was void bec it was
entered into under a common mistake.
 Case: Couturier v Hastie
 a seller and buyer who entered into a contract to buy corn
which was on its way to the UK. unknown to both parties,
the corn had deteriorated and the captain of the ship had
sold it off (he got to save some money instead of putting it
to waste). court held that since the corn had not exist at
the time of contract, there was total failure of
consideration and the buyer was not liable to pay. this is
where i enter a contract w u and we think it exist but it
doesnt.
 Section 6 of the Sale of Goods Act 1979.
 The perishing of specific goods will amount to a
fundamental mistake
 Where there is a contract for the sale of specific goods,
and the goods without the knowledge of the seller have
perished at the time when the contract is made, the
contract is void
 Case: McRae v Commonwealth Disposals Commission
 concerned the sale of a wrecked oil tanker. buyers
bought the ship and went on an expedition to salvage the
tanker but found nothing. the Commission claim that they
were not liable as the contact was void due to a mistake.
court held that plaintiff was entitled to damages
 when automatically jumping to the conclusion that
because the subject matter of the contract does not exist,
that this will amount to a valid claim for mistake. If there is
a term in the contract which allocates the risk to one party
in the event of non-existence or non-delivery of the
goods, any breach of this will amount to a breach of
contract, meaning a claim for mistake would not be able
to be made.
o Res sua
 This category of fundamental mistake refers to where two
parties contract for the purchase of some kind of property, but
unknown to both of these parties, the purchaser of the property
already owns the property.
 Mistake as to the possibility of performance
 where parties thought that they COULD perform the contract
BUT actually cannot
 u think u can, but u CANT
 case: Cooper v Phibbs
 It was held that the contract and lease that existed
between the complainant and the defendant was voidable
due to the claim being in equity, as Mr Cooper had
beneficial ownership of the salmon fishery and not legal
ownership. This case concerned ‘res sua’ and it was a
mistake as to the title of the property; Mr Cooper was
already the beneficial owner of the salmon fishery and
there could not be a lease. It was held that such an
agreement would be set aside due to a common mistake
by both parties as to ownership.
 here was an agreement to purchase a lease, but
unknown to both parties, the purchasing party already
had a life entitlement to the lease through other means.
Therefore, the contract could have been set aside for
mistake
  Case: Sheikh Bros v Ochsner
 parties contracted to grow a certain amount of crop on
the land without realising the land was insufficient to grow
the amount of crop contracted for. court held that the
contract was void due to mistake as to the possibility of
performance.
 Case: Griffith v Brymer
 an uncle mistakenly told his nephew that the fishery
belonged to the uncle. after uncle's death, nephew went
into an agreement to rent from uncle's daughters. in
actual fact, the fishery actually belonged to the nephew
himself. HoL held the mistake was only such as to make
the contract voidable. Lord Westbury: "if parties contract
under a mutual mistake, and misapprehension as to their
relative and respective rights, the result is that the
agreement is liable to be set aside as having proceeded
upon a common mistake." so basically the court has the
right to impose wtv terms was necessary and here the
courts set the contract aside.
o Mistake as to quality of the subject matter
 Where parties assume that the item or subject matter of the
agreement is of a particular quality, but it actually does not
 An example would be a purchase of a famous footballer’s
boots that have been signed and it was believed to be of
this quality at the time of contracting, and then
subsequently came to light that they were not actually the
footballer’s boots, this would be a mistake as to the
quality of the subject matter.
 This area of law concerns the issue of not being able to
complete a contract. Hence, mistake as to quality of the subject
matter is not deemed to be fundamental to the contract and
would not make the contract impossible.
 The parties are violating the conditions of the agreement.
 case: Bell v Lever Bros. Ltd
 [1932] only a mistake to the identity of the parties or of
subject matter to the contract, as well as an item’s quality,
would be able to successfully negate consent and
therefore void a contract, as if it had never existed. The
mistake must be essential to the identity of the contract.
 Case: Leaf v International Galleries
 There were two important issues for the court to provide a
decision on. The first was whether the plaintiff had the
right to rescind the contract, five years after agreeing on
the terms with the defendant. The second issue was
whether the mistake as to the painter of the art was
 fundamental enough to void the contract between the
parties.
 The plaintiff’s claim had failed as a significant amount of
time had lapsed between agreeing to the contract and the
window to rescind. The court found that the mistake that
was made regarding the painter of the art was
fundamental but it was not severe enough to make the
contract void.
 Case: Solle v Butcher
 landlord rented out his flat to his tenant on a mistaken
belief that the rent is free from rent control. tenant found
out that the flat is subject to rent control and the landlord
counterclaim the overpaid amount. court held that the
lease was valid at law but void at equity
 EQUITY WILL ALWAYS PREVAIL
 Contrast to: Magee v Pennine Insurance (1969)
 5 requirements to establish the existence of a common mistake
o requirements are seen in Bell v Lever Bros but was stated in Great
Peace
 the ship was charted in order to assist a salvage operation
which was believed to be 35 miles a way from it. the salvage
location turned out to be 410 miles away and the charterers tried
to avoid the contract by claiming that a common mistake
existed. court held that even though it took a longer time, it was
still possible to carry out the contract. performance had not
become impossible or radically different from what the parties
intended. the 5 requirements of common mistake are:
 1) There must be a shared belief in the condition of
subject matter.
 2) There cannot be a guarantee from any side that the
situation of circumstances exists.
 3) The absence of the condition of circumstances must
not be attributed to any party's responsibility.
 4) The absence of the condition of circumstances must
make the fulfilment of the contract impossible.
 5) the state of affairs may be the existence or a vital
attribute of the consideration to be provided or the
circumstance which must subsist that in the performance
of a contractual adventure is to be possible (not
paraphrased)
o Great Peace Shipping v Tsavliris (2002)
 https://www.lawteacher.net/cases/great-peace-shipping-v-
tsavliris.php

Mutual Mistake
 one mistake shared by both parties
 both parties mutually made a mistake
 definition: neither party to a contract is aware that the other party is
contracting on a diff basis. the lack of agreement is mutual
 An agreement mistake is one in which a fundamental mistake has been made
relating to the terms of the contract which prevent the formation of a legally
binding contract. This is often referred to as an ‘offer and acceptance’
mistake. The parties will subjectively believe they have formed a legally
binding contract, but in reality have not done so. This first examination of
agreement mistake will concentrate on mutual agreement mistake, where
both of the parties to the contract hold this belief.
 case: Raffles v Wichelhaus (1864)
o Case concerened a contract for the purchase of a shipment of cotton
which was to arrive on the ship named Peerless. it so happened that
there were 2 ships with the same name that left from the same port.
one arrived in october. the second in december. plaintiff meant the
december cargo. defendant meant the october cargo. the court held
that there was no contract between parties. Therefore, as per offer and
acceptance rules, there was no mirror agreement due to this mistake.
This was a reasonable mistake to make, therefore the contract was
void for mistake
 Smith v Hughes (1871)
o provides a contrasting set of facts. In this case, a contract was formed
for the purchase of some oats, which the purchaser had previously
used a sample of. When the oats for the contract were delivered, the
purchaser complained that they were new oats, rather than old oats,
and he was mistaken as to this. The contract never stated that the oats
were to be old or new.
o This argument was rejected, as an agreement was formed via the
sample of the oats. The purchaser agreed to purchase a lot of the oats
he had been given a sample of, which he was, there was no question
as to the agreement, and the purchaser was simply mistaken as to the
sample of the oats being old when they were new.
o Hannen J’s comment
 *view Justice Hannen made a comment
 Case: Rose v Pim [1953]
o rose was asked to supply horse beans called feverose to a firm in
egypt. being unsure, they asking Pim (supplier) what were feverose.
Pim explained that it merely meant horsebeans. in actual fact, there
were 3 types (feves, feverose and fevettes). Rose supplied the feves
which were larger and cheaper and the firm in egypt brought a claim for
supplying the wrong beans. Rose attempted to bring a claim for Pim to
rectify the contract. court held the claim of rectification failed but the
courts held instead that there was a claim for mistake.
 The doctrine of fault in mutual agreement mistake – highlighted in Scriven
Bros v Hindley [1913]
 o In this case, there was an auction for two lots of cargo from a ship. One
was hemp, and one was tow. The auction description did not list that
the two lots of cargo had different contents. Both lots of cargo were in
the same packaging, and there were no distinguishing factors between
the two (aside from the contents). A prospective buyer inspected one of
the lots of cargo which contained hemp, and assumed that both lots
contained hemp based on the identical packaging. He then purchased
the other lot, which contained tow.
o The issue here is that the parties had formed an objective agreement
for that specific lot, and there was no mutual mistake. However, as the
mistake was caused by the auctioneer’s actions of not distinguishing
the two lots, the courts ignored this fact and the contract was void for
mistake. The key fact is that the defendant had no duty to examine the
different lots, but the auctioneer did.
 c/f Smith v Hughes
o The doctrine of fault is also evident in Smith v Hughes, it was the fault
of the buyer that they did not expressly indicate that old oats were
required. If the seller was aware of this, the case would have been
decided differently. Therefore, the doctrine of fault can work for or
against either party in the contract; it is not always the buyer or always
the seller.
 Test for mutual mistake:
o The courts will apply an objective test to the question of whether there
is an agreement, considering whether one party’s interpretation was
more reasonable than the others.
o The leading authority for this test is Smith v Hughes, which was
examined above. The most reasonable approach to the contract was
the one of the defendants, who believed the agreement was formed
based on the sample oats.

Unilateral Mistake
 one party is aware of the others mistake
 where one party makes a mistake and the other party is aware of the mistake
and does nothing to correct it
 The three requirements that will render a contract void for unilateral mistake in
relation to the terms of a contract are:
o One party is mistaken as to a term of the contract, and would not have
entered the contract but for this mistake
 the courts will consider whether, if the mistaken party had known
the real truth as to their mistake, they still would have entered
into the contract. If they would have, this cannot amount to an
actionable claim for mistake.
o The mistake is known or reasonably ought to be known to the other
party - Chwee Kin Keong v Digilandmall Com
 In this case, Digilandmall.com Pte Ltd were selling HP laser
printers online. They owned two separate websites. On both of
 the sites the printer was priced at over $3000. A technical
mistake was made by an employee and it was then priced at
only $66 on both websites. Chwee Kin Keong discovered the
mistake and purchased a large amount of these printers. The
website refused to sell and Chwee Kin Keong commenced an
action for damages.
 It was held that the contract was void for mistake. This was
because the defendant had constructive knowledge of the
mistake. This was clear because they purchased a large
amount, knowing a mistake as to the price had been made.
 This means the party benefitting from the mistake cannot simply
claim ignorance to a mistake, under many circumstances it
should be obvious that a mistake has been made if the deal is
too good to be true.
o The mistaken party is not at fault
 if the mistake made is unreasonable they would be considered
to be at fault
 his type of mistake seems fairly straightforward to prove on a
cursory examination, but the requirements have proven fairly
difficult to meet. In Hartog v Colin and Shields [1939] 3 All ER
566 a contract was formed for a certain type of hare skin. The
seller had priced it at a price one-third the custom price. Similar
to the previous case examined, the defendant had taken
advantage of the mistake that they either were aware of, or
should have been aware of.
 most unilateral mistakes are mistakes of identity
 This form of mistake applies when only one of the parties to the contract is
mistaken as to part of the contract. Unilateral mistake is limited, but will
usually operate in circumstances where one party is mistaken as to part of the
contract, and the other party is aware of this fact and takes advantages of it.

Unilateral mistake as to identity - 4 elements to prove identity is important

 the most common form of unilateral mistake that is actually actionable is
where there has been a mistake of identity.
 Party A sells some goods to Party B. Party A is mistaken as to the identity of
Party B, who is in actual fact a fraud. Party A transfers property of the goods
to Party B before receiving anything in turn. Party B then sells the goods on to
Party C, and Party B disappears.
 He intended to deal with someone else
o Case: Sowler v Potter
 D was Ann Robinson who had been previously convicted of
allowing disorderly conduct at a cafe. she later applied for a
lease under the name of Ann Potter. the agent who knew of the
Ann Robinson case, thought that he was entering into the
contract w a diff person. court held that this was a mistake of
identity as he intended to deal with Ann Potter and not Ann
Robinson.
  The other party was aware of this intention that you wanted to deal with
another person
o Case: Hardman v Booth
 P had a business called Gandall & Co. It was managed by
Thomas Gandall and assisted by a clerk named Edward
Gandall. X been persuaded by E that E owned the firm and X
delivered the goods to E. E sold the goods off to a third party.
court held that no contract existed bec X's offer was to T and E
was aware of this.
 At the time the contract was made, the identity of the party was of crucial
importance
o Case: Cundy v Lindsay
 if the identity of a person doesnt matter, then u cannot claim
mistake
 A rogue named Blen Karn from Woodstreet ordered items from
Lindsay who thought they were trading with a reputable firm
located at the same street by the name of Blen Kiron and Co.
and supplied the goods on credit (give goods first, pay later). the
rogue purposely signed as Blen Kiron and later sold the items to
an innocent third party. court held, contract was void for mistake
as to identity as L had never intended to contract with B and the
title of the goods did not pass to him. therefore, it cannot pass to
C. C was forced to return the goods.
 Lord Cairns: "of him (Blenkarn), they (the plaintiff) knew nothing,
and of him they never thought. With him they never intended to
deal. Their minds never for an instant of time rested upon him,
and as between him and then there was no consensus of mind
which could lead to any agreement or any contract whatever"
 He took reasonable steps to verify the other parties identity
o Case: Ingram v Little
 a car owned by 3 woman was advertised for sale. a rogue
calling himself Hutchinson offered to buy the car by cheque.
after seeing the women were reluctant, the man gave his full
name and address. the women checked the identity at the post
office and confirmed that there was a person w that name and
address. they then accepted the cheque and then discovered
that it was worthless and that Hutchinson was fake. by then the
car had been sold to a third party. the woman sued to reclaim
the car. court allowed them to reclaim bec checking the identity
at the directory confirmed that the identity of the contracting
person was important.

Mistake inter absentaes

 mistake made when ure not in the presence of each other
 contract is not ftf
 case: Cundy v Lindsay (1878)
 o u need to actually show that the identity of the person and u need to
show who u intended to contract with
 case: King’s Norton Metal Co. Ltd. V Etridge, Merrett & Co. Ltd
o a rogue named Wallace set up a fake firm called Hallam and Co. he
ordered goods from P and subsequently to D who was an innocent
third party. the P is now tryna sue the third party. court held that the
contract was upheld bec the courts were of the opinion that it was a
mistake of attributes and not identity. P thought they were dealing w a
firm but instead they were dealing w an individual. his personality could
not have affected the minds of the P and even though fraud existed, it
was not an operative mistake

Mistake inter presents

 contract is ftf
 difficult to prove bec ure ftf
 case: Phillips v Brooks Ltd [1919]
o X entered P's jewelry shop claiming he was Sir George Bullough from
St James Square. P checked the directory and indeed found a Sir
George Bullough living at that place. X then purchased a string of
pearls and a ring with a fake cheque. He left the pearls at the store but
took the ring which he sold to Brooks. when P discovered the cheque
was dishonored, P sued Brooks to reclaim the ring. P's claim failed. the
fact that he lied doesnt matter. they were ftf
o Chief Justice Morton's quotation
 ‘The fact that the seller was induced to sell by fraud of the buyer
made the sale voidable, not void. He could not have supposed
that he was selling to any other person; his intention was to sell
to the person present, and identified by sight and hearing; it
does not defeat the sale because the buyer assumed a false
name, or practised any other deceit to induce the vendor to sell.’
 Case: Ingram v Little [1961]
 Case: Shogun Finance Ltd v Hudson (2001) The Times
o a rogue pretended to be Mr Patel and purchased the car on higher
purchase. the finance company did a check on Mr Patel and found that
he was ?. after obtaining the car, the rogue sold the car to an innocent
third party, the company is now claiming the car from third party. courts
held for the finance company on the basis that bec thr was no contract
bet the company and the rogue, the property could not be passed.
 Case: Lewis v Averay
o P sold his car to someone who produced studio pass with his pic to
impress P. P accepted a cheque which was later dishonored but the
car had alr been sold to an innocent 3rd party. P sued D to reclaim his
car. court held there was no mistake bec the identity of the purchaser
was not an important factor. therefore, the innocent 3rd party could
retain the car.
Distinction between Identity and Attribute
 Identity
o The most common form of unilateral mistake that is actually actionable
is where there has been a mistake of identity
o Party A sells some goods to Party B. Party A is mistaken as to the
identity of Party B, who is in actual fact a fraud. Party A transfers
property of the goods to Party B before receiving anything in turn. Party
B then sells the goods on to Party C, and Party B disappears.
o To understand the significance of a claim for mistake as to identity, the
result of a claim under fraudulent misrepresentation in this example
should be examined. As you will know, the two remedies for
misrepresentation are damages and rescission. In the case of
damages, as Party B has disappeared, Party A will have nobody to
direct the claim for damages to, and will have no chance of recovering
anything. As for rescission, as Party B passed property to the goods to
Party C, who were unaware of the misrepresentation, there will be a
bar to rescission in the form of third party rights. As you can see,
fraudulent misrepresentation is not an ideal claim to bring where the
statement maker cannot be traced.
o A claim for unilateral mistake as to identity provides a remedy in this
situation. Due to the mistake, the contract is void at the time of
creation, therefore, Party B would never have title in the goods, and
therefore could never pass title to Party C. This means that Party A has
one of two remedies; they may recover the goods from Party C, or sue
Party C under the tort of conversion.
o Unfortunately, there is a clear issue here, Party A and Party C are both
innocent, yet one will be subject to an unequitable result. Lord Denning
in Lewis v Averay [1972] 1 QB 198 suggested in the event of mistake
as to identity, the contract should be void, not voidable. This would
protect the third party, as Lord Denning suggested they are generally
the most innocent party and the one in need of protection. This
approach was rejected by the other judges and instead the courts
outlined circumstances in which a mistake to identity would be
actionable
 Case: Lewis. v Avery per Lord Denning
o A man's name is one of his attribute. It is also a key to his identity. If
then he gives a false name, is it a mistake as to his identity? Or a
mistake as to his attribute? This fine distinctions do no good to the law
o i.e. even smthg as simple as a name, if u give the wrong name, then is
it an attribute or identity
o The decision in Lewis v Averay made a distinction between ‘true
mistakes as to identity’ and mistakes as to attributes. Mistake as to the
attributes of a party is not sufficient for an actionable claim of mistake,
 for example, the creditworthiness of a party. The mistake must be as to
the actual identity of the party.
 identity is utmost importance
 case: Shogun v Hudson per Lord Millett
o identified and recognised that the law in tis area is undecided.